104 



DISCOVERY 



The German industries have a great advantage over 

 the industries of Great Britain and of other countries, 

 not only owing to their being able to obtain excellent 

 coal at prices which seem inconceivable over here, but 

 also owing to the fact that wages are far lower in 

 Germany than in this country, in the United States, 

 in France, Switzerland, and elsewhere. Before the war 

 a substantial day wage for hard-working men, such as 

 a miner, was M. 5 in Germany, which then was equal 

 to 5s. Now miners and other hard-working and well- 

 paid men receive about M. 80 per day, which at the 

 current rate of exchange is equivalent to about 2s. 

 However, it should not be thought that German real 

 wages have declined to less than half the pre-war rate. 

 According to the statistics published by the German 

 Government, living expenses have increased from 100 

 previous to the war to 1,397 i'"" November 1921, when 

 very high prices were reached. In other words, the 

 cost of living had increased only fourteen-fold, although 

 in November 192 1 the cost of the pound sterling in 

 German money had increased fully fifty-fold. \Mhle 

 the cost of living had grown fourteen-fold by November 

 192 1, wages had increased approximately sixteen-fold, 

 as in the case of miners, whose earnings have been 

 advanced from M. 5 to M. 80. There is a vast differ- 

 ence between the foreign and the internal value of the 

 German mark. 



The cost of living in Germany has been kept extremely 

 low owing to the Government's policy. Large sub- 

 sidies have been granted to cheapen food. The limita- 

 tion of rents causes the workers to live practically rent- 

 free, for a rent of M. 10 per week is equal only to a few 

 pence in English money. Fares and freights are kept 

 exceedingly low, because the State railways are run at 

 a gigantic loss. Taxes, however and upon whomso- 

 ever imposed, are borne by the masses as a whole in the 

 form of increased prices. Taxation is exceedingly low 

 in Germany if compared with taxation ni Great Britain. 

 Germany's revenue from April i, 1921, to the end 

 of the year came to M. 51,665,295,000. At M. 750 

 to the £ that sum is equal to ;f73,ooo,ooo in round 

 figures, and the revenue for the whole year may come 

 to M. 70,000,000,000, which would be equivalent to 

 £105,000,000 at the rate mentioned, and to £'140,000,000 

 at the exchange of 500 marks to the £. 



German industry and commerce are prospering at 

 the cost of Germany's finances. Between April i 

 and December 31, 1921, Germany's national expendi- 

 ture came to M. 132,360,574,000. Of this sum 

 only M. 51,665,295 was covered by revenue, while 

 M. 80,592,363,000 was found by increasing the floating 

 debt of the country, which had rapidly risen to 

 M. 246,921,550,000 at the end of last year. The 

 floating debt consists partly of bank-notes and partly 

 of treasury bills which are discounted with the banks 



and which must be renewed from time to time. The 

 stock of bank-notes in circulation has increased as 

 follows since pre-war times : 



We cannot wonder that the value of the mark has 

 declined very severely in view of the gigantic increase 

 of the bank-notes in circulation. There is considerable 

 danger that, at some time or other, the banks, alarmed 

 by the financial recklessness of the Government, may 

 refuse re-discounting the treasury bills which fall due. 

 In that case the Government would have to repay the 

 banks in cash, which means in bank-notes. The note 

 printing press would be set in motion with the utmost 

 energy, and the consequence might be the complete 

 collapse of the German currency. It is significant 

 that the great increase in the note circulation took 

 place, not during the war, but after its conclusion. 



The new men who came into power in consequence 

 of the revolution tried to make themselves and the 

 new regime popular by increasing wages and salaries, 

 granting subsidies and doles, and keeping taxation low. 

 They endeavoured to create an atmosphere of pros- 

 perity by means of the printing press, and by running 

 more and more deeply into debt. The regime of in- 

 flation has been fatal to aU who live on fixed incomes. 

 Many of those who formerly were rich or well-to-do 

 have been utterly ruined. Also the cash savings of 

 millions of thrifty men and women deposited in the 

 savings banks or placed in small bonds have been 

 reduced to a trifle. Naturally millions of thrifty and 

 conservative men have been embittered by the robbery 

 practised upon them, and among the most conservative 

 people a spirit has been raised which at some time or 

 other may prove exceedingly dangerous to the demo- 

 cratic form of government in Germany. The dilution 

 of the currency has enriched all the debtors by reducing 

 their debts to a mere fraction. It has transferred 

 millions from the thrifty to the thriftless. 



The inflation of the currency has created a gambling 

 mania throughout Germany, and has led to the most 

 reckless speculation, which is the usual result of cur- 

 rency dilution. All business has become a gamble. 

 An ordinary' commercial transaction maj' result in a 

 huge unexpected profit owing to a sudden change in 

 the value of the currency, or may bring about a ruinous 

 unexpected loss. Gambling in foreign exchange, in 

 stock exchange securities, in land and houses, and in 

 goods of every kind has taken unprecedented pro- 



